Housing crisis

Economist explains how to solve the housing crisis in the United States

  • Paul Constant is a writer at Civic Ventures and co-host of the “Pitchfork Economics” podcast.
  • He recently spoke with economist and author Jenny Schuetz about the housing crisis.
  • Cities and rural areas face problems due to strict zoning guidelines and lack of government intervention.

Turn on any conservative news channel during the run-up to the midterm elections and chances are you’ll find a sensational story about how Democrat-run cities are hells overrun by the sans. – homelessness, crime and uncontrollable housing costs. . Pundits love to blame permissive social policies for the dilapidation they highlight, but the truth is that rural America — including many red zones — faces the same problems of crime, housing costs and homelessness. -shelter.

In fact, when you look closely at the housing crisis in the United States, economist and author Jenny Schuetz explained in the latest episode of “Pitchfork Economics”, it becomes clear that it is not about a blue state-red state or an urban-rural crisis.

“The big overall problem, for the whole country, is that we don’t have enough houses for everyone,” said Schuetz, whose book “Fixer-Upper: How to Repair America’s Broken Housing Systems” came out in february. Instead of a cohesive national housing strategy, America allowed the free market to write American housing policy, resulting in an excess of luxury homes, a dire lack of public housing, and the criminalization homeless people.

A recent study by the non-profit organization Up for Growth found that the United States would need 3.8 million more homes just to meet current housing needs. “So there are literally no places to house all the people who need a place to live, Schuetz said. Meanwhile, home construction has fallen 55% since 2006 due to the housing market crash and its aftershocks, and because house prices have skyrocketed over the past 40 years as wages remained virtually flat, more and more Americans joined the US homeless population.

Schuetz said a real solution to our housing crisis requires the adoption of policy solutions at the federal, state and local levels. Zoning laws and the onerous approval processes that come with them must be entirely rewritten or abolished, and the tax code must be redefined to encourage the middle class to pursue other forms of wealth-building and retirement portfolios.

An over-regulated market and a broken tax code

Reducing housing costs and increasing housing supply starts with removing electricity from zoning signs. “Housing is one of the most regulated markets we have from a supply perspective,” Schuetz said. Developers looking to build a house, housing estate or apartment building in much of the country must obtain permission from a local zoning board – and these boards are often populated by local landlords looking to increase the value of their own home by rejecting multi-family or affordable housing. . About 75% of all US cities are zoned for single-family homes, limiting the building of condos, apartments, or even duplexes and triplexes.

But the federal government is not beyond reproach either. A number of incentives have been written into the federal tax code “to encourage home ownership over other asset classes as the primary mechanism for creating wealth,” Schuetz said. As a result, more than half of US homeowners now expect the sale of their home to fund a significant portion of their retirement. When the majority of owners and buyers view housing as the foundation of their wealth, as opposed to one of the most basic human needs, the housing market behaves more like an investment market. This combination of zoning, taxation and investing in real estate to maximize profits creates an unregulated market of winners and losers, with winners’ homes rising sharply in value and losers left with no roof over their homes. head.

And Schuetz said the poorest fifth of U.S. households simply could not afford market-priced housing without an additional subsidy. “Only the federal government has enough pockets to give every poor family a housing voucher or expand the working income tax credit or the child tax credit,” she added. Raising the federal minimum wage could also help the nearly 11 million low-income Americans who spend more than 50% of their annual income on housing.

If we don’t adopt policy solutions soon, housing construction will fail to keep up with growing demand, housing costs will continue to rise, and more and more Americans will be left homeless – and the hyperbolically portrayal dark that the conservative media has painted may be the future for all of America, not just the blue cities.